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Meeting with your landlord? Do your homework

Meeting with your landlord? Do your homework
Sharing information can lead to win-win relationships

Landlord meetings are on the minds of farmers this winter – and might be on your mind too, as cash rents are a major piece of the financial puzzle on many farms.

Being ready for these meetings can make a huge difference. It can mean the difference between creating a win-win relationship with your landlord – or ending up stuck in a win-lose mindset. How are you preparing?

Getting clear about who your landlord is – considering how they view their land and what they want from their relationship with it – and with you – is the first step to prepare for a productive meeting.

Meeting with your landlord? Do your homework! (Thinkstock/hraska)

Then, you need to do your financial homework and crunch the numbers ahead of time. Knowing exactly what you can and can't afford, because you've calculated all your costs, helps you make smart decisions. And many landlords appreciate when you're transparent and share financial data with them. It helps them better understand what you're facing.

Getting the information
One farmer was in a tough situation for his upcoming landlord meeting. His landlord was somewhat distanced from the realities of the current ag economy. This wasn't really the landlord's fault – he'd never been a farmer himself and didn't grow up on a farm. He didn't know all the inputs and money it took to put a crop in the ground. The past few years, he had raised cash rent by $100 an acre each year.

The farmer was worried about lease negotiations for the upcoming year. He knew he couldn't afford an additional $100/acre in rent. To prepare for the meeting, he worked with his ag finance specialist to put together the total projected cost of next year's inputs, along with some potential crop price scenarios.

He and his specialist analyzed his projected breakevens and looked at what he could realistically afford to pay for that ground. Then, they put together a spreadsheet the farmer could use to show the landlord these numbers, to help him better understand the current situation.

Transparency at work
The farmer brought the spreadsheet to his meeting with the landlord. The landlord took a close look as he listened. He told the farmer that the data was eye-opening to him and he really appreciated him being willing to share it.

The farmer brought up the possibility of lowering the rent $100 an acre for their new lease, to be more in line with the current realities of the ag economy and the numbers he'd shown the landlord. His landlord agreed. He said that after seeing and understanding the farmer's financial reality, a lower rent made the most sense for both of them. He said he liked working with the farmer and didn't want to have to look for another tenant.

What will you be analyzing this winter to prepare for your landlord meetings? What do you plan to share with them? Learn more about how to build strong relationships with your landlords by reading 'The landlord challenge,' an article in our quarterly publication, Smart Series – plus, read perspectives from Dr. Mike Boehlje, Dr. David Kohl, Jolene Brown and Dr. Danny Klinefelter in this issue.

The opinions of Darren Frye are not necessarily those of Farm Futures or the Penton Farm Progress Group.

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